Ron Knutson: Yes, I would say, Ken, really, in the first half of the year, we were getting more of the price increases that were put in place later in 2022 that flowed through into early 2023. We look at our overall unit volume being shipped out the door. I would say that it’s kind of flattened out in that core. So we saw more of a decline in the core volume in the first half of the year and then really in the second half of the year and even here into January and February, it’s kind of hit that what we would call kind of a low point and has been running relatively flat. So, I think that some of that pressure that we saw on the core business is really more so, took place as we were transitioning some of the sales reps earlier in the year with some of the disruption that we did, or I wouldn’t call it maybe disruption, but it was some of the plan changes, but we’ve kind of leveled that off at this point and we don’t see volumes decreasing here in the second half of 2023.
And actually it’s ticked up a little bit here in January and February. So, but you’re right. I mean, 2023, a big chunk of our overall growth was really related to price.
Bryan King: Especially in the first half of the year. Because we had significant pricing initiatives that Ron and Cesar and each of the teams put in place during 2022. And as we eclipsed those in 2023, we had the first half of 2023, we were getting the benefit of the 2022 pricing initiatives that had not rolled through for the full 12 months. And most all that was done by early or mid last year. I’m trying to think, Ron, if you can give us any specifics about pricing initiatives that we took on last year, there’s some small ones inside of, like Gexpro on resetting contract terms at around 12/31 metrics. And so when we’ve got a contract, those pricing resets don’t take place until the contract resets. But in terms of dynamic pricing activities, I’d say outside of kind of some dynamic pricing initiatives, we took some specific pricing actions during the inflationary. More the higher inflationary periods that we were feeling in 2022, coming from our suppliers.
Ron Knutson: Yes, that’s right. There was limited price. I mean, we were very selective around price increases in the second half of 2023. But you’re right, Bryan, that the majority of it was the carryover effect of what we did in 2022 and then being surgically going after just specific products or specific areas that we knew we had to keep margins up on in the latter half. But it was pretty limited.
Ken Newman: Got it. That’s helpful. Maybe if I could just squeeze one more in here, just on the supply chain. I know there’s a lot of moving pieces, but curious if you have any color on just how much of your inventory is coming from over the water. Maybe from the Red Sea and the shipping lane dynamics there, and maybe just any color on whether you’re seeing some impacts from transport and logistics expenses, creeping one way or the other.
Bryan King: Yes, from an expense standpoint, on the transportation side, we certainly felt more of it in 2022, 2023 really seemed to normalize for us. We’ve not seen anything 10 at this point. That is starting to have a dramatic impact on us. From an overall cost standpoint, we’re just not seeing it yet. If it’s yet to come, but we’ve not seen it here in the second half of 2023, or at least in the first couple of months into 2024.
Ron Knutson: On your middle question on margins, I’ve been reminded in here that we do have very specific initiatives that are more surgical, that are a part of our gross margin strategy, that we’re walking gross margins up in some different parts of the different verticals, in different parts of the – in – that’s – but that’s not going to be, that the sort of stuff where you see 10 bps or 25 bps at a time. That’s not kind of the more pricing initiatives that we took. That would be the ones that you would wonder whether or not, when you see a top line number, whether or not that’s volume versus pricing, these are more very specific gross margin objectives that we’ve got that are taking place at the vertical levels to drive gross margins up to a more appropriate level.
Ken Newman: Got it. Very helpful. Thanks.
Ron Knutson: Yep.
Operator: Your next question is from Brad Hathaway with Far View.
Bryan King: Morning, Brad. We lose Brad.
Operator: One moment. Brad, your line is live.
Brad Hathaway: Do you hear me now?
Bryan King: We got you. Yes. I was worried that 75 minutes into the call that we lost you completely.
Brad Hathaway: No, understood. I’ll try to be quick.
Bryan King: No, you’re good.
Brad Hathaway: So appreciate the incremental color on kind of, I guess, some of the macro headwinds because I guess, obviously, I think people kind of look at the overall macro environment and feel more benign about it. But I guess the PMI is sub 50 and you’re seeing some things in your specific industries. What I was curious though, to ask, that’s having been covered pretty well, was with regards to Hisco. So you haven’t really started the integration yet till December, correct?
Bryan King: Yes. I’d say that we started taking some actions in November, but they really didn’t have any impact to either top line or profitability.
Brad Hathaway: Okay.
Bryan King: But yes, that’s right. So we weren’t allowed to start taking actions until November. Really in November, when we started moving things around, it was on the TestEquity side, not on the Hisco side.
Brad Hathaway: Understood. Because I think for, I guess, now we’ll call TestEquity or Industrial Technologies. You made a comment that you kind of see this midterm path to, I think, 12% margins, if that’s correct. And I guess I was wondering, is the Hisco integration the major factor in that, or are there other building blocks you can kind of point to, to get from where we are now and kind of TestEquity to that kind of more midterm goal?
